Accounting for Renewable and Environmental Resources, March 2000
Total Page:16
File Type:pdf, Size:1020Kb
26 survey of current business March 2000 Accounting for Renewable and Environmental Resources last summer, ablueribbonpaneloftheNationalAcademyof ing of the interaction between the U.S. economy Sciences’ National Research Council completed a congression- and the environment? The panel’s investigation, ally mandated review of the work that the Bureau of Economic while based on data that are highly imprecise and Analysis (BEA) had published on integrated economic and en- in some cases speculative, suggests that the de- vironmental accounts. The panel’s final report commended velopment of the accounts proposed for Phase BEA for its initial work in producing a set of sound and ob- III would be likely to encompass the most sig- jective prototype accounts. The November 1999 issue of the nificant economy-environment interactions. This SURVEY OF CURRENT BUSINESS contained an article by William D. Nordhaus, the Chair of the Panel, that presented an overview observation is tempered by the realization that to of the major issues and findings and a reprint of chapter 5, date nothing approaching adequate comprehen- “Overall Appraisal of Environmental Accounting in the United sive environmental accounting for a country of the States.” Chapter 3, “Accounting for Subsoil Mineral Resources” complexity of the United States has yet been un- was reprinted in the February 2000 issue; chapter 4, “Accounting dertaken. For BEA or the federal government to for Renewable and Environmental Resources” is reprinted below. prepare a full set of environmental accounts would This article is reprinted with permission from Nature’s Num- require a substantial commitment. bers: Expanding the National Economic Accounts to Include This chapter provides a review of the issues the Environment. Copyright of the National Academy Press, involved in accounting for renewable and envi- Washington DC. This is a report of the National Research Coun- ronmental resources. It is not intended to be a cil, prepared by the Panel on Integrated Environmental and comprehensive review of work in this area. Rather, Economic Accounting and edited by William D. Nordhaus and it delineates the issues that are involved in envi- Edward C. Kokkenlenberg. ronmental accounting and presents two important he previous chapter reviewed issues involved specific examples that illustrate these issues. The T in extending the national accounts to include first section reviews BEA’s efforts in environmental subsoil assets. This chapter focuses on two other accounting to date. Next, we analyze how stocks aspects of environmental accounting: renewable and flows of residuals from human activities relate and environmental resources. BEA has proposed to natural sources of residuals, natural resource covering these two categories of resources in fu- assets, stocks, flows, and economic activity. The ture work on integrated accounting. As discussed third section examines issues involved in account- in Chapter 1, Phase II of that work would focus ing for renewable and environmental resources. on different classes of land (e.g., agriculture, for- The chapter then turns to general issues associated est, and recreation land), on timber, on fisheries, with the physical data requirements of environ- and on agricultural assets such as grain stocks and mental accounting and with valuation. We next livestock. Phase III would address environmental investigate in greater detail the cases of forests and resources, including, for example, air, uncultivated air quality to illustrate how augmented accounting biological resources, and water. might actually be done. The chapter ends with the The general principles set forth in Chapter 2 in- panel’s conclusions and recommendations in the dicate that increasingly severe obstacles are likely area of accounting for renewable and environmen- to arise as the national accounts move further from tal resources. Appendix B identifies potentially the boundaries of the market economy. The dis- useful sources of data for developing supplemental cussion in this chapter confirms the premise that accounts identified by the panel in the course of its BEA’s Phase III raises the most difficult concep- investigation. tual, methodological, and data problems. This finding presents a dilemma that must be faced in BEA EFFORTS TO DATE IN expanding the accounts: Should follow-on efforts ACCOUNTING FOR RENEWABLE AND focus on those resources that can be most eas- ENVIRONMENTAL RESOURCES ily included given existing data and methods, or shouldBEAfocusonincludingthoseresourcesthat This section reviews BEA’s initial design for its would have the largest impact on our understand- supplemental accounts for natural-resource and survey of current business March 2000 27 • environmental assets. A more complete evalua- the purview of the environmental accounts ex- tion of BEA’s efforts on forests is included later tend? Table 4–1 shows BEA’s tentative decisions in the chapter. As discussed in Chapter 2, a on how it proposed to structure its supplemen- critical issue involved in the development of aug- tal accounts (BEA’s Integrated Environmental and mented accounts is setting the boundary. How Economic Satellite Accounts [IEESA] from Bureau far from the boundary of the marketplace should of Economic Analysis, 1994a: Table 1). Phase II TABLE 4±1 IEESA Asset Account, 1987 [Billions of dollars] This table can serve as an inventory of the estimates available for the IEESA's. In decreasing order of quality, the estimates that have been filled in are as follows: For made assets, estimates of reproduc- ible tangible stock and inventories, from BEA's national income and product accounts or based on them, and pollution abatement stock, from BEA estimates (rows 1±21); for subsoil assets, the highs and lows of the range based on alternative valuation methods, from the companion article (rows 36±41); and best available, or rough-order-of-magnitude, estimates for some developed natural assets (selected rows 23±35 and 42±47) and some environmental assets (selected rows 48±55) prepared by BEA. The ``n.a.''Ðnot availableÐentries represent a research agenda. Change Opening Stocks Depreciaton, Revaluation Closing Total, Net Depletion, Capital and Other Stocks (3+4+5) Degradation Formation Changes (1+2) (1) (2) (3) (4) (5) (6) Row PRODUCED ASSETS Made assets ..................................................................................................................................... 1 11,565.9 667.4 ±607.9 905.8 369.4 12,233.3 Fixed assets .................................................................................................................................. 2 10,535.2 608.2 ±607.9 875.8 340.2 11,143.4 Residential structures ............................................................................................................... 3 4,001.6 318.1 ±109.8 230.5 197.4 4,319.7 Fixed nonresidential structures and equipment ....................................................................... 4 6,533.6 290.1 ±498.1 645.3 142.9 6,823.7 Natural resource related ....................................................................................................... 5 503.7 23.1 ±19.2 30.3 12.0 526.8 Environmental management ............................................................................................ 6 241.3 8.4 ±7.0 10.6 4.7 249.6 Conservation and development ................................................................................... 7 152.7 3.6 ±4.4 5.3 2.7 156.4 Water supply facilities .................................................................................................. 8 88.5 4.8 ±2.5 5.3 2.0 93.3 Pollution abatement ......................................................................................................... 9 262.4 14.7 ±12.2 19.7 7.3 277.1 Sanitary services ......................................................................................................... 10 172.9 12.8 ±5.6 13.7 4.8 185.8 Air pollution abatement and control ............................................................................ 11 45.3 .6 ±4.1 3.5 1.3 45.9 Water pollution abatement and control ....................................................................... 12 44.2 1.3 ±2.5 2.6 1.2 45.5 Other ................................................................................................................................. 13 6,029.9 267.0 ±478.9 615.0 130.9 6,296.9 Inventories ..................................................................................................................................... 14 1,030.7 59.3 .......................... 30.1 29.2 1,090.0 Government ............................................................................................................................... 15 184.9 6.8 .......................... 2.9 3.8 191.7 Nonfarm ..................................................................................................................................... 16 797.3 62.4 .......................... 32.7 29.7 859.7 Farm (harvested crops, and livestock other than cattle and calves) ..................................... 17 48.5 ±9.9 .......................... ±5.5 ±4.4 38.6 Corn ...................................................................................................................................... 18 10.2 .3 .......................... ±1.1 1.4 10.5 Soybeans .............................................................................................................................. 19 5.0 ±.1 .......................... ±1.0 .9 4.9 All wheat